Texas Bar Journal - September 2013

Water Law

Mary Sahs 2013-08-27 03:08:00

SINCE SENATE BILL 1 WAS ENACTED IN 1997, EVERY LEGISLATIVE SESSION SEEMS TO BE A “BIG” SESSION ON WATER LAW. The 83rd regular session was no exception. This article summarizes the major bills of general applicability affecting Texas water resources. As with all legislative summaries, this is just that: a summary. In addition to the bills discussed here, the Legislature passed and the governor signed a significant number of bills of less general impact, which are not included in this article. Unless noted otherwise, the bills are effective Sept. 1, 2013.
FUNDING THE STATE WATER PLAN
The state has developed a regional process for planning for water resource management, which every five years results in a State Water Plan. Most of the management strategies needed to meet the growing need for water identified during this process remain unfunded. According to the 2012 State Water Plan, approximately $27 billion of the $53 billion needed to implement the 2012 plan will require financial assistance from the state. Such financial assistance is provided through the Texas Water Development Board (TWDB). With the passage of House Bill 4, H.B. 1025, and Senate Joint Resolution 1, the Legislature took steps to address funding, but voters will have to approve the measure in November.
In combination, the bills create the State Water Implementation Fund for Texas (SWIFT) and the State Water Implementation Revenue Fund of Texas (SWIRFT), to be administered by the TWDB. The funds will consist of any money provided to them by law, which will include $2 billion out of the Economic Stabilization Fund, commonly referred to as the “Rainy Day Fund.” This appropriation is contingent upon voter approval of a constitutional amendment affirming creation of the TWDB funds and the $2 billion transfer.
The funds are designed to finance projects in the State Water Plan. The agency may use the funds to establish a revolving loan program for that purpose. The TWDB is authorized to make loans for up to 30 years at an interest rate not less than 50 percent of the rate of interest available to the agency. The legislation provides guidance on the percentage of funding that should be allocated to rural, conservation, and reuse projects. The TWDB must establish a system for prioritizing projects under legislative criteria. Within each planning region, the Regional Water Planning Groups will also prioritize management strategy projects in their respective regions.
INCREASED FOCUS ON WATER AVAILABILITY, CONSERVATION, AND WASTE
Several bills incrementally change various water resource programs, indicating an increasing awareness of the continuing drought. Largely in response to continuing drought conditions during which utilities have run out of water to supply to customers, the Legislature passed H.B. 252. The bill amends Water Code Chapter 13 to require increased notice to the state by a retail public water utility and each entity from which the utility is obtaining wholesale water. When such utilities or entities are reasonably certain that the water supply will be available for fewer than 180 days, they must notify the Texas Commission on Environmental Quality (TCEQ). The TCEQ must adopt implementing regulations.
H.B. 857 amends Chapter 16 of the Water Code to increase the frequency of water loss audits. Chapter 16 currently requires all utilities providing potable water service to perform and file an audit computing the utility’s water loss every five years. Water utilities receiving financial assistance from the TWDB must do this annually. The amendments affect all retail public utilities providing potable water service to a population of more than 3,300 connections. The agency must adopt implementing regulations for appropriate methodologies and submission dates based on population served. All other retail public utilities will remain on the existing five-year audit and report schedule. When a retail public utility files a water audit, under amendments to Water Code Chapter 13 (H.B. 1461), the utility must notify each of its customers in writing.
The Legislature made it more painful to ignore requirements to report water use, implement drought contingency plans, and enforce water use restrictions. H.B. 2615 increased the penalty for failing to timely file water use reports required by Water Code Chapter 11 applicable to surface water right holders. The penalties were also increased for failing to make monthly water use information available to the TCEQ upon request. Under current law (Water Code 16.055), wholesale and retail public water suppliers and irrigation districts’ water conservation and drought plans must be implemented in areas of the state where the governor or a political subdivision has declared a water-related emergency. H.B. 3604 authorizes penalties for failure to implement such plans. Under amendments to Chapter 54 of the Local Government Code, municipalities are now authorized to bring an enforcement action against those violating an ordinance relating to water conservation, including water restrictions (H.B. 654).
Addressing conservation, amendments to codes other than the Water Code are also worthy of mention. Under H.B. 198, amending Property Code Chapter 202, a property owner’s association can no longer restrict a property owner from using drought-resistant landscaping or waterconserving natural turf. The association, however, may require approval of a landscape plan to ensure aesthetic compatibility with other landscaping in the subdivision. H.B. 2781 amends three different codes and addresses rainwater harvesting. Chapter 447 of the Government Code is amended to expand requirements for rainwater harvesting systems for state buildings to apply to both indoor and outdoor water use. Privately owned rainwater harvesting systems, of greater than 500-gallon capacity and having an auxiliary water supply, must have a backflow prevention assembly or air gap, under Texas Health and Safety Code Chapter 341.
Finally, Local Government Code Chapter 580 is amended to expand city and county training requirements related to rainwater harvesting standards. Under H.B. 3605, if a retail public utility serves 3,300 or more connections and applies to the TWDB for financial aid, the TWDB must review the utility’s water conservation plan for compliance with the agency’s best management practices. Under this amendment to Chapter 17 of the Water Code, the TWDB must issue a report to the utility and the Legislature on its findings.
CHANGES TO STATE AGENCIES WITH JURISDICTION OVER WATER ISSUES
Currently the TWDB is governed by a six-member board, with members appointed by the governor but serving only part-time. H.B. 4 amends Water Code Chapter 6 to change this to a board of three full-time members appointed by the governor, who will be paid $150,000 per fiscal year. The board must collectively have expertise in engineering, finance, and law. Geographic diversity is also required. H.B. 4 also creates a seven-member advisory board. Conforming amendments are made to Chapters 15 and 17 of the Water Code to adjust funding.
Throughout the years, state authority over the economic regulation of water and sewer service has moved between the Public Utility Commission of Texas (PUC) and the state agency with jurisdiction over water quality. In a continuation of that practice, the 83rd Legislature transferred certain of those functions back to the PUC from the TCEQ. Under H.B. 1600 and S.B. 567, the TCEQ’s water and wastewater rate jurisdiction and authority over certificates of convenience and necessity and other economic regulation is transferred to the PUC. Chapters 12 and 13 of the Water Code are amended, effective Sept. 1, with delayed implementation of certain provisions.
Additionally, comprehensive procedural changes are made to the ratemaking process for investor-owned utilities, varying depending on the number of connections served. Conforming changes are made to other chapters of the Water Code and the Special District Local Laws Code. These changes generally take effect Sept. 1, 2014, except the Texas Office of Public Utility Counsel may begin intervening in cases at the TCEQ effective Sept. 1, 2013.
WATER FOR USE IN FIRE SUPPRESSION
The myriad entities providing drinking water throughout Texas are regulated by a seeming maze of sometimes overlapping and contradictory statutes and regulations. Overall, the government oversees two main issues: the quality of the water supplied for human consumption (health and safety) and the rates charged to a customer for drinking water service. Under the category of health and safety regulation, most standards derive from the federal Safe Drinking Water Act. In order to ensure that water leaving a water treatment plant reaches the end user with the same high quality required by those standards, a flow of sufficient pressure is required. This pressure requirement does not take into account the greater pressure required for fire hydrants and use in fire suppression. Because additional pressure generally means additional cost, utilities do not always provide sufficient flow pressure for this purpose (fire flow), generally in less populated areas of the state. Municipalities generally require fire flow. In situations where an investor-owned utility or water supply corporation serves customers within a city or within a city’s extraterritorial jurisdiction (ETJ), there may be fire flow pressure on one street and insufficient flow on the next, depending on the water utility. This issue has been debated and discussed for many years.
Finally, H.B. 1973 has amended Chapter 341 of the Texas Health and Safety Code to authorize a municipality to adopt fire flow standards established by the TCEQ for an investor-owned utility or water supply corporation providing service to residential areas within the city or its ETJ. The utility’s infrastructure existing on Sept. 1, 2013, is basically grandfathered; a city may not require the utility to retrofit such infrastructure to meet the fire flow standards.
WATER DISTRICTS
Several bills were enacted affecting the wide range of governmental entities with jurisdiction over water issues (water districts). The omnibus bill is S.B. 902, which was widely supported by water districts. The bill amends Water Code Chapters 49, 51, and 54 and related provisions of Chapter 388 of the Texas Health and Safety Code, and Local Government Code Chapters 375 and 552. Practitioners representing districts operating under the applicable chapters of the Water Code should review these changes carefully. Groundwater districts and water supply corporations may also be impacted by certain provisions.
H.B. 738 amended Section 54.0161 of the Water Code to ensure that the TCEQ considers input from a commissioners court on the proposed creation of a municipal utility district in the county but outside the corporate limits of a municipality.
Driven by the urbanization of districts that originally provided primarily irrigation water but now serve other customers, S.B. 611 amended Water Code Chapters 51, 55, and 58. These changes address how water control and improvement districts, water improvement districts, and irrigation districts that deliver irrigation water determine assessments and charges against irrigable land.
Under amendments to Chapter 49 of the Water Code and Chapter 322 of the Government Code made by H.B. 2362, the Legislative Budget Board will periodically review the effectiveness and efficiency of the policies, management, fiscal affairs, and operations of river authorities, starting with the Lower Colorado and Brazos River authorities.
INTERBASIN TRANSFERS OF SURFACE WATER
Under current law, transfers of water under surface water rights are not favored. Nearly every session, amendments to Section 11.085 of the Water Code relating to interbasin transfers of water are proposed. Such activity is likely to continue as the state’s population grows in areas of dwindling water supplies. H.B. 3233 attempts to streamline the TCEQ’s interbasin transfer process by eliminating the requirement to assess the effect on ratepayers, limiting the issues to be considered in a contested case hearing on the transfer, making notice requirements more manageable, clarifying considerations in assessing whether detriments to the basin of origin are less than the benefits to the receiving basin, allowing an extension or renewal of a contract that is the basis of the transfer, and adding an exemption for transfer of water to serve a retail water utility located partly within and partly outside the basin of origin.
OF ADDITIONAL NOTE
H.B. 2615 also amends Water Code Chapter 11 to make a surface water right exempt from cancellation for non-use to the extent the non-use results from curtailment of water by the TCEQ or from drought.
S.B. 1282, which became effective on May 15, 2013, clears up some confusion about the deadline for groundwater conservation districts to propose desired future conditions. Water Code Chapter 36 is amended to set a May 1, 2016, deadline.
H.B. 3509 was enacted to add Chapter 490F to the Government Code to establish procedures for a state agency to follow when developing a habitat conservation plan to protect endangered species. It would have established a funding mechanism and an oversight process, but it was vetoed by the governor. As stated in the governor’s veto statement:
“H.B. 3509 would make substantial changes to a process that has been efficiently overseen since 2009 by the comptroller of public accounts. This process should remain at a single agency rather than a nine member panel.”1
The author would like to thank her summer intern, Nia Thomas, who attends the Ann Richards School for Young Women Leaders, for her assistance on this article.
NOTES
1. Obtained on http://governor.state.tx.us/news/veto/18676/.
MARY SAHS is the principal of Sahs & Associates, P.C., which is currently a solo practice of law. She is the managing editor of Essentials of Texas Water Resources, published by TexasBarBooks.